The money, more than double what FreshDirect has raised in its 14 years, will help meet consumers’ evolving shopping habits, which, increasingly, include shopping online for food.

FreshDirect LLC has raised $189 million from private equity investors, the online grocer and meal service said today.

The amount is more than double the total that the online grocer and meal service has raised since its start in 2002. FreshDirect says it has been profitable since 2010.

FreshDirect’s service area is concentrated in the Northeast, covering metropolitan New York and New Jersey, Delaware and parts of Connecticut and Pennsylvania, including Philadelphia. It also delivers seasonally to consumers on the Jersey Shore and the Hamptons area of Long Island, N.Y. It generates 90% of its revenue from repeat customers, and 10% of its revenue from new customers, the company says.

J.P. Morgan Asset Management is the lead investor and two J.P. Morgan representatives will join FreshDirect’s board. Existing investors—W Capital and the AARP Innovation Fund—also participated. Before the private equity investment round, FreshDirect had raised $91 million in three funding rounds, according to Crunchbase.

FreshDirect founder and CEO Jason Ackerman says the funding comes at a “pivotal time” for FreshDirect. “The funding will fuel expansion into new markets, increase capacity with new manufacturing and distribution facilities and launch new businesses that meet today’s consumers’ needs as their preferences and buying habits evolve,” Ackerman says. A FreshDirect spokeswoman says the company has no new geographic markets to announce at this time.

advertisement

Larry Unrein, head of J.P. Morgan Asset Management’s private equity group, cites FreshDirect’s history with e-grocery, as well as FreshDirect’s FoodKick service, in making the investment. “High-quality food, produce and packaged goods providers are drawing significant attention from the investment community,” he says. “The company is also expanding its reach through the new mobile, on-demand offering FoodKick.”

FoodKick is the mobile-app-only offshoot of FreshDirect. It launched in January and offers delivery of select foods and beverages (including alcohol) in an hour, with a minimum order of $20. FreshDirect initially tested the service in Brooklyn and Queens. The company spokeswoman says FoodKick service will be available in Manhattan in a few weeks.

FoodKick gets 87% of its sales volume from returning customers, a spokeswoman says, adding that the figure gives FreshDirect a “strong foundation” in its expansion plans.

FreshDirect is the second-largest web-only grocer in North America by sales, after Peapod LLC. FreshDirect is No. 73 in the Top 500; Peapod is No. 65.

Growth at both companies has slowed in recent years as more merchants began selling food online. FreshDirect’s sales grew 11% last year, according to Internet Retailer research estimates, and the company’s compound annual growth rate over the past five years was 12.76%. Peapod’s figures trend similarly: 10% growth in 2015 and a five-year CAGR of 10.51%.

These mature e-retailers—FreshDirect launched in 2002 and Peapod in 1989—have coverage in specific geographic markets and manage their own distribution and delivery fleets.

Instacart Inc., meanwhile, is not an e-retailer but a technology-based delivery company that delivers groceries purchased from local stores. It makes its money from the $5.99 fee consumers pay per order and from a fee paid by the retailer. It operates in 25 metropolitan areas and with more than 100 retailers, mostly grocery retail chains. It has become a way for grocery stores to test the e-grocery waters. In some cases, Instacart employees pick products from store shelves and deliver them to the consumer; in others, grocery store employees pick the products for Instacart to deliver.

Wal-Mart offers consumers in well over 30 markets the ability to order online and pick up their orders curbside at a nearby Wal-Mart store. A year ago, Wal-Mart offered this service in just five markets. Kroger offers buy online, pickup curbside service in nine markets, up from one 18 months ago. Other grocery chains, including Safeway Inc. and Meijer Inc., also are expanding e-grocery services. Walmart is No. 4 in the Top 500 Guide for its online sales across all categories. Kroger is No. 83, Safeway is No. 147 and Meijer is No. 332.

Internet Retailer’s first-ever 2016 Online Food Report documents how the online sale of food is suddenly a booming market and puts to rest the notion that food retailing is the exclusive province of stores. The 25-page research report, “Online Food Shopping Goes Mainstream,” identifies the major players driving this sea change in food retailing, reports on the market shares of the leaders, identifies and reports on the growth of the 44 online food merchants ranked among the U.S. Top 1000 e-retailers, estimates the future growth of the online food retailing and explains the strategies of the leaders in this explosive new e-commerce market.